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Nonprofit Organization Provides Microloans to Black-Led Businesses In Southern California

Access to capital is one of the greatest ways small businesses can become sustainable and focus on growth. However, many Black-led companies need support in gaining access to capital. In response, a California-based nonprofit is supporting Black entrepreneurs in the state with microloans. 

Photo by Anna Shvets: https://www.pexels.com/photo/woman-in-black-blazer-sitting-on-black-office-chair-3727464/

The Black Cooperative Investment Fund (BCIF) offers zero-interest microloans ranging from $5000 to $20,000 to Black-owned businesses in Los Angeles, Orange, Riverside, and San Bernadino counties. The microloans also come with a 25 percent forgivable option for entrepreneurs. 

Launched in 2017 by president and board chair Robert Lewis, BCIF has a mission of supporting social change in the Black community through asset and wealth building. 

“We started having conversations about what a Black-led nonprofit in California would look like and, from those conversations, economic mobility and economic power continued to come up as a theme,” Lewis told Black Enterprise. “From that, the focus on microloans to support Black businesses, that essentially rose to the top of something that we wanted to focus on.”

A Lack of Funding Opportunities Leaves Black-Owned Businesses In The Dust 

According to the U.S. Chamber of Commerce, Black entrepreneurs’ lack of capital leaves them at a disadvantage compared to their white counterparts. Black business owners are three times more likely to have their growth negatively affected by a lack of funding.

The pandemic illuminated this issue as an estimated 58 percent of Black-led businesses faced financial challenges with another 41 percent closing its doors. When Paycheck Protection Program (PPP) loans were administered, Black business owners were declined five times more than white entrepreneurs. Finally, as the Biden administration rolled out its Fiscal Recovery Funds — emergency funds available to state and local governments to fuel the economy — Black entrepreneurs received less business grants than their white counterparts.  

An estimated 70.6 percent of Black-led businesses rely on personal and/or family savings to fund their businesses — further placing business owners at a disadvantage. 

Part of the Solution

The BCIF is contributing to the solution through its microloan program and offering further technical support. 

“We have partnerships that we leverage with a couple local CDFIs where we are able to provide our applicants with no-cost business coaching, technical assistance, and business advisory services,” Lewis told Black Enterprise. 

The organization’s microloans are funded through donors — people and companies — who believe in economic development and the fundamental role entrepreneurship can play in wealth generation. To be eligible for a microloan, a business must gross more than $500,000 annually and be focused on contributing to the socio-economic impact in the Black community. 

“There are a handful of businesses that we don’t fund, and I think they’re the ones most folks generally think of as not having the most positive effect on our community, [like] liquor stores, gambling institutions, [and] companies that profit in the adult entertainment industry,” he said. 

Since its launch, BCIF has awarded microloans to companies such as Chino Beauty, Ride On Bike!, Aqua Equity, and Hygiene First. 

Funding The Future 

Loan repayments are placed back into BCIF’s fund to maintain the organization’s resources. The organization’s annual fundraising goal of $500,000 allows them to lend 24 to 36 microloans annually. 

“We want to be what we call a catalytic force for building consciousness, a mass movement around change based on economic importance,” Lewis told Black Enterprise.  “And what I mean by that is, oftentimes in our community when you’ve sought change based on moral or ethical imperatives, I call it pulling on heartstrings to get them to kind of do right by us, and we think change happens more swiftly when there are fiscal imperatives tied to it.”

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